Monday, May 3, 2010

Expert Views on the Deepwater Horizon Incident and Aftermath

I had the pleasure of listening in to a phone conference earlier today organized by Morgan Stanley’s oil field services’ analyst, Ole Sorer. The topic was the Deepwater Horizon disaster, including what went wrong, who is liable, and what some of the longer-term impacts to the E&P industry might be. The discussion leaders included Mike Smith, a 15-year veteran of TransoceanSeis Matters. (since retired) and two attorneys who have dealt with oil spill litigation in the past. I learned a lot, and thought I’d share some of their perspectives with the readers of

According to the Transocean veteran, BP had discovered significant quantities of oil and gas at Macondo, the name of the field that the Deepwater Horizon rig was drilling. BP had reached total depth and penetrated the reservoir horizon at 18,000 feet. Halliburton had cemented the last casing string in the well and inserted several cement plugs within it which BP intended to drill out at some future point when they returned to Macondo to begin full-field development.

With the cement plugs in place, Transocean had begun the process of removing the drill string in the well (used during the cementing operation) and had begun to replace the heavier mud in the wellbore with less dense sea water. This is apparently a common practice, as the plugs are designed to contain the reservoir fluids downhole. Effectively, the Deepwater Horizon was hours away from moving off the Macondo location.

At this point, some speculation begins. The leading hypothesis is that the cement plugs failed. The drilling crew wouldn’t be expecting a failure and perhaps weren’t monitoring the systems that detect an influx of fluids into the well, drill string, and drill pipe riser. Unbeknownst to those on the rig, a mixture of gas and water was coming up the drill string and riser to the surface and the deck of the Deepwater Horizon. The volatile mixture of high-pressure hydrocarbons likely ignited quickly and unexpectedly, killing the 11 individuals who were on the drilling floor itself...........continued......